Powering the world’s economy with wind, water and solar, and perhaps a little wood sounds like a good idea until a person looks at the details. The economy can use small amounts of wind, water and solar, but adding these types of energy in large quantities is not necessarily beneficial to the system.

While a change to renewables may, in theory, help save world ecosystems, it will also tend to make the electric grid increasingly unstable. To prevent grid failure, electrical systems will need to pay substantial subsidies to fossil fuel and nuclear electricity providers that can offer backup generation when intermittent generation is not available. Modelers have tended to overlook these difficulties. As a result, the models they provide offer an unrealistically favorable view of the benefit (energy payback) of wind and solar.

If the approach of mandating wind, water, and solar were carried far enough, it might have the unfortunate effect of saving the world’s ecosystem by wiping out most of the people living within the ecosystem. It is almost certain that this was not the intended impact when legislators initially passed the mandates.

[1] History suggests that in the past, wind and water never provided a very large percentage of total energy supply.

Figure 1 shows that before and during the Industrial Revolution, wind and water energy provided 1% to 3% of total energy consumption.

For an energy source to work well, it needs to be able to produce an adequate “return” for the effort that is put into gathering it and putting it to use. Wind and water seemed to produce an adequate return for a few specialized tasks that could be done intermittently and that didn’t require heat energy.

When I visited Holland a few years ago, I saw windmills from the 17th and 18th centuries. These windmills pumped water out of low areas in Holland, when needed. A family would live inside each windmill. The family would regulate the level of pumping desired by adding or removing cloths over the blades of the windmill. To earn much of their income, they would also till a nearby plot of land.

This overall arrangement seems to have provided adequate income for the family. We might conclude, from the inability of wind and water energy to spread farther than 1% -3% of total energy consumption, that the energy return from the windmills was not very high. It was adequate for the arrangement I described, but it didn’t provide enough extra energy to encourage greatly expanded use of the devices.

[2] At the time of the Industrial Revolution, coal worked vastly better for most tasks of the economy than did wind or water.

Economic historian Tony Wrigley, in his book Energy and the English Industrial Revolution, discusses the differences between an organic economy (one whose energy sources are human labor, energy from draft animals such as oxen and horses, and wind and water energy) and an energy-rich economy (one that also has the benefit of coal and perhaps other energy sources). Wrigley notes the following benefits of a coal-based energy-rich economy during the period shown in Figure 1:

Deforestation could be reduced. Before coal was added, there was huge demand for wood for heating homes and businesses, cooking food, and for making charcoal, with which metals could be smelted. When coal became available, it was inexpensive enough that it reduced the use of wood, benefiting the environment.

The quantity of metals and tools was greatly increased using coal. As long as the source of heat for making metals was charcoal from trees, the total quantity of metals that could be produced was capped at a very low level.

Roads to mines were greatly improved, to accommodate coal movement. These better roads benefitted the rest of the economy as well.

Farming became a much more productive endeavor. The crop yield from cereal crops, net of the amount fed to draft animals, nearly tripled between 1600 and 1800.

The Malthusian limit on population could be avoided. England’s population grew from 4.2 million to 16.7 million between 1600 and 1850. Without the addition of coal to make the economy energy-rich, the population would have been capped by the low food output from the organic economy.

[3] Today’s wind, water, and solar are not part of what Wrigley called the organic economy. Instead, they are utterly dependent on the fossil fuel system.

The name renewables reflects the fact that wind turbines, solar panels, and hydroelectric dams do not burn fossil fuels in their capture of energy from the environment.

Modern hydroelectric dams are constructed with concrete and steel. They are built and repaired using fossil fuels. Wind turbines and solar panels use somewhat different materials, but these too are available only thanks to the use of fossil fuels. If we have difficulty with the fossil fuel system, we will not be able to maintain and repair any of these devices or the electricity transmission system used for distributing the energy that they capture.

[4] With the 7.7 billion people in the world today, adequate energy supplies are an absolute requirement if we do not want population to fall to a very low level.

There is a myth that the world can get along without fossil fuels. Wrigley writes that in a purely organic economy, the vast majority of roads were deeply rutted dirt roads that could not be traversed by wheeled vehicles. This made overland transport very difficult. Canals were used to provide water transport at that time, but we have virtually no canals available today that would serve the same purpose.

It is true that buildings for homes and businesses can be built with wood, but such buildings tend to burn down frequently. Buildings of stone or brick can also be used. But with only the use of human and animal labor, and having few roads that would accommodate wheeled carts, brick or stone homes tend to be very labor-intensive. So, except for the very wealthy, most homes will be made of wood or of other locally available materials such as sod.

Wrigley’s analysis shows that before coal was added to the economy, human labor productivity was very low. If, today, we were to try to operate the world economy using only human labor, draft animals, and wind and water energy, we likely could not grow food for very many people. World population in 1650 was only about 550 million, or about 7% of today’s population. It would not be possible to provide for the basic needs of today’s population with an organic economy as described by Wrigley.

(Note that organic here has a different meaning than in “organic agriculture.” Today’s organic agriculture is also powered by fossil fuel energy. Organic agriculture brings soil amendments by truck, irrigates land and makes “organic sprays” for fruit, all using fossil fuels.)

[5] Wind, water and solar only provided about 11% of the world’s total energy consumption for the year 2018. Trying to ramp up the 11% production to come anywhere close to 100% of total energy consumption seems like an impossible task.

Figure 2. World Energy Consumption by Fuel, based on data of 2019 BP Statistical Review of World Energy.

Let’s look at what it would take to ramp up the current renewables percentage from 11% to 100%. The average growth rate over the past five years of the combined group that might be considered renewable (Hydro + Biomass etc + Wind&Solar) has been 5.8%. Maintaining such a high growth rate in the future is likely to be difficult because new locations for hydroelectric dams are hard to find and because biomass supply is limited. Let’s suppose that despite these difficulties, this 5.8% growth rate can be maintained going forward.

To increase the quantity from 2018’s low level of renewable supply to the 2018 total energy supply at a 5.8% growth rate would take 39 years. If population grows between 2018 and 2057, even more energy supply would likely be required. Based on this analysis, increasing the use of renewables from a 11% base to close to a 100% level does not look like an approach that has any reasonable chance of fixing our energy problems in a timeframe shorter than “generations.”

The situation is not quite as bad if we look at the task of producing an amount of electricity equal to the world’s current total electricity generation with renewables (Hydro + Biomass etc + Wind&Solar); renewables in this case provided 26% of the world’s electricity supply in 2018.

Figure 3. World electricity production by type, based on data from 2019 BP Statistical Review of World Energy.

The catch with replacing electricity (Figure 3) but not energy supplies is the fact that electricity is only a portion of the world’s energy supply. Different calculations give different percentages, with electricity varying between 19% and 43% of total energy consumption.1 Either way, substituting wind, water and solar in electricity production alone does not seem to be sufficient to make the desired reduction in carbon emissions.

[6] A major drawback of wind and solar energy is its variability from hour-to-hour, day-to-day, and season-to-season. Water energy has season-to-season variability as well, with spring or wet seasons providing the most electricity.

Back when modelers first looked at the variability of electricity produced by wind, solar and water, they hoped that as an increasing quantity of these electricity sources were added, the variability would tend to offset. This happens a little, but not nearly as much as one would like. Instead, the variability becomes an increasing problem as more is added to the electric grid.

When an area first adds a small percentage of wind and/or solar electricity to the electric grid (perhaps 10%), the electrical system’s usual operating reserves are able to handle the variability. These were put in place to handle small fluctuations in supply or demand, such as a major coal plant needing to be taken off line for repairs, or a major industrial client reducing its demand.

But once the quantity of wind and/or solar increases materially, different strategies are needed. At times, production of wind and/or solar may need to be curtailed, to prevent overburdening the electric grid. Batteries are likely to be needed to help ease the abrupt transition that occurs when the sun goes down at the end of the day while electricity demand is still high. These same batteries can also help ease abrupt transitions in wind supply during wind storms.

Apart from brief intermittencies, there is an even more serious problem with seasonal fluctuations in supply that do not match up with seasonal fluctuations in demand. For example, in winter, electricity from solar panels is likely to be low. This may not be a problem in a warm country, but if a country is cold and using electricity for heat, it could be a major issue.

The only real way of handling seasonal intermittencies is by having fossil fuel or nuclear plants available for backup. (Battery backup does not seem to be feasible for such huge quantities for such long periods.) These back-up plants cannot sit idle all year to provide these services. They need trained staff who are willing and able to work all year. Unfortunately, the pricing system does not provide enough funds to adequately compensate these backup systems for those times when their services are not specifically required by the grid. Somehow, they need to be paid for the service of standing by, to offset the inevitable seasonal variability of wind, solar and water.

[7] The pricing system for electricity tends to produce rates that are too low for those electricity providers offering backup services to the electric grid.

As a little background, the economy is a self-organizing system that operates through the laws of physics. Under normal conditions (without mandates or subsidies) it sends signals through prices and profitability regarding which types of energy supply will “work” in the economy and which kinds will simply produce too much distortion or create problems for the system.

If legislators mandate that intermittent wind and solar will be allowed to “go first,” this mandate is by itself a substantial subsidy. Allowing wind and solar to go first tends to send prices too low for other producers because it tends to reduce prices below what those producers with high fixed costs require.2

If energy officials decide to add wind and solar to the electric grid when the grid does not really need these supplies, this action will also tend to push other suppliers off the grid through low rates. Nuclear power plants, which have already been built and are adding zero CO2 to the atmosphere, are particularly at risk because of the low rates. The Ohio legislature recently passed a $1.1 billion bailout for two nuclear power plants because of this issue.

If a mandate produces a market distortion, it is quite possible (in fact, likely) that the distortion will get worse and worse, as more wind and solar is added to the grid. With more mandated (inefficient) electricity, customers will find themselves needing to subsidize essentially all electricity providers if they want to continue to have electricity.

The physics-based economic system without mandates and subsidies provides incentives to efficient electricity providers and disincentives to inefficient electricity suppliers. But once legislators start tinkering with the system, they are likely to find a system dominated by very inefficient production. As the costs of handling intermittency explode and the pricing system gets increasingly distorted, customers are likely to become more and more unhappy.

[8] Modelers of how the system might work did not understand how a system with significant wind and solar would work. Instead, they modeled the most benign initial situation, in which the operating reserves would handle variability, and curtailment of supply would not be an issue.

Various modelers attempted to figure out whether the return from wind and solar would be adequate, to justify all of the costs of supporting it. Their models were very simple: Energy Out compared to Energy In, over the lifetime of a device. Or, they would calculate Energy Payback Periods. But the situation they modeled did not correspond well to the real world. They tended to model a situation that was close to the best possible situation, one in which variability, batteries and backup electricity providers were not considerations. Thus, these models tended to give a far too optimistic estimates of the expected benefit of intermittent wind and solar devices.

Furthermore, another type of model, the Levelized Cost of Electricity model, also provides distorted results because it does not consider the subsidies needed for backup providers if the system is to work. The modelers likely also leave out the need for backup batteries.

In the engineering world, I am told that computer models of expected costs and income are not considered to be nearly enough. Real-world tests of proposed new designs are first tested on a small scale and then at progressively larger scales, to see whether they will work in practice. The idea of pushing “renewables” sounded so good that no one thought about the idea of testing the plan before it was put into practice.

Unfortunately, the real-world tests that Germany and other countries have tried have shown that intermittent renewables are a very expensive way to produce electricity when all costs are considered. Neighboring countries become unhappy when excess electricity is simply dumped on the grid. Total CO2 emissions don’t necessarily go down either.

[9] Long distance transmission lines are part of the problem, not part of the solution.

Early models suggested that long-distance transmission lines might be used to smooth out variability, but this has not worked well in practice. This happens partly because wind conditions tend to be similar over wide areas, and partly because a broad East-West mixture is needed to even-out the rapid ramp-down problem in the evening, when families are still cooking dinner and the sun goes down.

Also, long distance transmission lines tend to take many years to permit and install, partly because many landowners do not want them crossing their property. In some cases, the lines need to be buried underground. Reports indicate that an underground 230 kV line costs 10 to 15 times what a comparable overhead line costs. The life expectancy of underground cables seems to be shorter, as well.

Once long-distance transmission lines are in place, maintenance is very fossil fuel dependent. If storms are in the area, repairs are often needed. If roads are not available in the area, helicopters may need to be used to help make the repairs.

An issue that most people are not aware of is the fact that above ground long-distance transmission lines often cause fires, especially when they pass through hot, dry areas. The Northern California utility PG&E filed for bankruptcy because of fires caused by its transmission lines. Furthermore, at least one of Venezuela’s major outages seems to have been related to sparks from transmission lines from its largest hydroelectric plant causing fires. These fire costs should also be part of any analysis of whether a transition to renewables makes sense, in terms of either cost or energy returns.

[10] If wind turbines and solar panels are truly providing a major net benefit to the economy, they should not need subsidies, even the subsidy of going first.

To make wind and solar electricity producers able to compete with other electricity providers without the subsidy of going first, these providers need a substantial amount of battery backup. For example, wind turbines and solar panels might be required to provide enough backup batteries (perhaps 8 to 12 hours’ worth) so that they can compete with other grid members, without the subsidy of going first. If it really makes sense to use such intermittent energy, these providers should be able to still make a profit even with battery usage. They should also be able to pay taxes on the income they receive, to pay for the government services that they are receiving and hopefully pay some extra taxes to help out the rest of the system.

In Item [2] above, I mentioned that when coal mines were added in England, roads to the mines were substantially improved, befitting the economy as a whole. A true source of energy (one whose investment cost is not too high relative to its output) is supposed to be generating “surplus energy” that assists the economy as a whole. We can observe an impact of this type in the improved roads that benefited England’s economy as a whole. Any so-called energy provider that cannot even pay its own fair share of taxes acts more like a leech, sucking energy and resources from others, than a provider of surplus energy to the rest of the economy.

Recommendations

In my opinion, it is time to eliminate renewable energy mandates. There will be some instances where renewable energy will make sense, but this will be obvious to everyone involved. For example, an island with its electricity generation from oil may want to use some wind or solar generation to try to reduce its total costs. This cost saving occurs because of the high price of oil as fuel to make electricity.

Regulators, in locations where substantial wind and/or solar has already been installed, need to be aware of the likely need to provide subsidies to backup providers, in order to keep the electrical system operating. Otherwise, the grid will likely fail from lack of adequate backup electricity supply.

Intermittent electricity, because of its tendency to drive other providers to bankruptcy, will tend to make the grid fail more quickly than it would otherwise. The big danger ahead seems to be bankruptcy of electricity providers and of fossil fuel producers, rather than running out of a fuel such as oil or natural gas. For this reason, I see little reason for the belief by many that electricity will “last longer” than oil. It is a question of which group is most affected by bankruptcies first.

I do not see any real reason to use subsidies to encourage the use of electric cars. The problem we have today with oil prices is that they are too low for oil producers. If we want to keep oil production from collapsing, we need to keep oil demand up. We do this by encouraging the production of cars that are as inexpensive as possible. Generally, this will mean producing cars that operate using petroleum products.

(I recognize that my view is the opposite one from what many Peak Oilers have. But I see the limit ahead as being one of too low prices for producers, rather than too high prices for consumers. The CO2 issue tends to disappear as parts of the system collapse.)

Notes:

[1] BP bases its count on the equivalent fossil fuel energy needed to create the electricity; IEA counts the heat energy of the resulting electrical output. Using BP’s way of counting electricity, electricity worldwide amounts to 43% of total energy consumption. Using the International Energy Agency’s approach to counting electricity, electricity worldwide amounts to only about 19% of world energy consumption.

[2] In some locations, “utility pricing” is used. In these cases, pricing is set in a way needed to provide a fair return to all providers. With utility pricing, intermittent renewables would not be expected to cause low prices for backup producers.

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About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.

Europe’s largest economy gets a health check this week with German data due to reveal whether it managed to avoid shrinking in the second quarter.

The export-reliant nation is being squeezed by the trade war between the U.S. and China and speculation is mounting that it may be headed for recession. Big-name companies including Continental, Daimler, BASF and Lufthansa have all slashed their outlooks

“Germany, Europe’s industrial backbone, is stuttering. The unemployment rate has risen for the second time in three months. The UK economy contracted for the first time since 2012, as output fell 0.2% in April to June. Italy’s debt crisis is only being made worse by political uncertainty…

“What’s more, the European Central Bank looks like it’s out of bullets to fire the economy up.”

“…an ultra-nationalist right-wing government in Italy… might just make a push to abandon the euro zone. The fear has arisen after the country’s prime minister, anti-immigrant xenophobe Matteo Salvini (sometimes referred to as Italy’s own Trump) called for snap elections in the parliamentary democracy, as early as October.”

Well, given the ongoing political realignments, Salvini and Lega are not ultra right wing (that’s utter non sense) it’s simply new manifestation of the center-right populist formation – given social conditions. The potential Euro area break out is at the moment the last Italian bargaining chip against Berlin-Brussels, not sure how serious and imminent it is if pressed to going live with that option.. On the other hand, it’s true that in terms of pathway and thresholds breached – Italy is indeed (apart from Greece) the most “collapse trajectory” advanced country within the EU bloc, so the final stages could proceed in relatively very fast order..

Xabier, I know your question is rhetorical but the diplomatic hostilities between France and Italy earlier this year may have passed some by:

“A diplomatic row between France and Italy has deepened, with France complaining of “unfounded attacks and outlandish claims” by Italian leaders. France recalled its ambassador to Italy for talks on Thursday, saying the situation was “unprecedented” since the end of World War Two.”

I’m not a Brexiteer, but as prosperity leaves Europe as fossil fuel become unaffordable, the Europeean land mass must inevitably revert to its old ways of previous centuries, that of nation states constantly at odds with each other, occasionally flaring into war as means allow it (wars require energy input)
Every state is motivated to self interest. If the group is going broke, then states will withdraw into themselves and try to save what they can

“Portugal’s fuel-tanker drivers voted on Saturday to strike from Monday for an indefinite period, raising fears about the impact on the country’s tourism-dependent economy during the busy summer season…

“The government will ration fuel for the public, restricting drivers to a maximum of 15 litres of petrol or diesel at specially designated stations.”

Many in Europe will be not too distressed to see the Germans get shaken up a bit: they’ve had too easy a ride at the expense of others: clever manipulation and who can blame them, but due for a salutary correction.

I took a nap today and dreamed that we in the West, enjoying BAU, suddenly realized that we hadn’t heard a word from Europe in a few days. The big puzzle was how supply chains manged to continue when there was no one on the other side of the pond. Surely, whatever caused Europeans to disappear would eventually get to us too. Fortunately, I woke up at that point.

“Investors have flocked to fixed income mutual funds at the fastest rate since the financial crisis, piling in almost $500bn in the first half of 2019 during trade war tensions, recessionary fears and market volatility.”

“…the virtuous cycle of easy monetary policy and no inflation in the aftermath of the financial crisis has sucked money into bond funds at an incredible place. As trillions of dollars of cash have been created out of thin air by central banks, a large hoard of bond market holdings via low cost, passive indexed bond funds and ETFs has been the preferred way for both retail funds and many institutional investors to obtain exposure…

If the bond market hits a rough patch, and investors exit their indexed bond funds, there will likely be indiscriminate selling of the individual bonds as well. This latent illiquidity of indexed bond ETFs has been only visible a few times in the past, and when it happens it is not pretty. . .So the takeaway is this: Only time will tell whether buying bonds at record low yield levels and record high prices is a good investment. I can argue both sides like all good two-handed economists even though I am not one myself. However, one thing seems clear – a large fraction of bond buyers are probably buying them on autopilot, paying little attention to yields.[Emphasis added.] As long as the price of the bond is going up, it is hard to argue with doing more of the same since the value of the holder’s account is probably going up. We simply have to watch and see what happens once and if the tide turns. In the meantime, investors may want to consider getting out of indexed bond funds that own negatively yielding bonds and instead, consider buying some good old-fashioned treasury bills that currently yield almost twice as much!

This is part of the bank problem that I wrote about a few days ago, that a friend of mine warned about. Big shifts in interest rates suddenly force banks to rebalance their portfolios, if they are somehow involved with these (or similar) things.

You might have heard the story about the three traders who decided to go into the business of trading sardines. The first trader bought a can of sardines for $5. He sold the same can of sardines to the second trader for $10, doubling his money. The second trader again doubled his money by selling the can of sardines to the third trader for $20. The third trader, knowing very well that he was overpaying for the sardines said to himself that “if the market for sardines crashed, at least I will be able to open the can of sardines and eat it”. The market did crash, and he opened the can to find that the sardines were rotten. He promptly went to the trader who had sold him the bad sardines and said “these sardines are no good!”, to which the second trader responded “of course they are no good for eating – they are trading sardines”!

Almost 10 trillion USD worth of the world’s government bond market is currently like these sardines. When a bond has negative yield, like a majority of the bond market in Germany and Japan today does, the bonds are being bought for trading, not for holding as investments, unless we undertake some financial alchemy to figuratively turn garbage to gold (and vice versa). When, and if yields rise, a ten year German Bund trading today at -0.25% nominal yield will almost certainly lose a good part of its principal, and for those who hold it to maturity, will also likely provide no income for their investment. In other words, unless the current holders of the bonds are able to trade them to someone else before they lose value, they will likely find that these bonds were neither a good long term investment nor a diversifier.

The things that seem to make the system work so far for bond funds seem to be (a) the fact that interest rates have been headed down, so asset prices have tended to rise (b) there are other buyers who want to get into this business of hoping for asset gains (c) the big positive interest rate differential to the US$ from the currencies that sell these negatively yielding currencies, and (d) a relatively favorable price for using derivatives to hedge against the possibility of a shift of US$ wiping out these gains.

By the time these negatively yielding bonds are hidden inside bond funds, few realize where they are. As soon a investors see a problem, they start pulling bonds out. But if the bond fund is committed to a certain distribution, it will need to keep buying regardless of how rates are going.

Of course, other parts of the system could break as well. Currency hedges look vulnerable, with the big changes we have been seeing likely, such as the changes in the value of the Yuan. Indirectly, they would seem to affect other currencies as well, since (for example) cheap goods from China would tend to adversely affect European sales of goods.

“The yen rose to its highest level in more than 1-1/2 years versus the dollar on Monday as investors ramped up bets that the Japanese currency could gain more in the case of a prolonged China-U.S. trade conflict.”

Although quite why the Yen should be considered ‘safe’ when Japan’s economy has been pretty stagnant since the early 90’s, and its central bank now owns assets worth more than the entire GDP of the economy it is trying to stimulate, is a puzzle.

Perhaps it is because Japan is less overtly teetering on the brink of political mayhem than some nations, although its spat with S Korea may perhaps test those perceptions:

“Flight to safety” All Mas370. Yes people following the rules of investment. Too bad that the whole thing is based on fundamentals totally alien to the talking heads. They all flunked physics. They got one thing right though, Past performance does not guarantee future performance. How we got past greeces bond defaults without contagion is beyond me.

“Growing evidence of a severe global recession is sure to provoke more aggressive monetary policies from central banks. They had hoped to have the leeway to cut interest rates significantly after normalising them. That hasn’t happened.

“Consequently, as the recession intensifies, central banks will see no alternative to deeper negative nominal rates to keep their governments and banks afloat through a combination of eliminating borrowing costs and inflating bond prices.”

“Central banks around the world are likely to loosen further, keeping sovereign yields very low. But we doubt that will bring about a clear economic improvement as quickly as investors hope. “With that in mind, we think that corporate earnings will fall well short of expectations later in 2019, hitting equities and corporate bonds.”

“Keep a close eye on more data on the health of the Chinese economy this week after deflation reappeared in the country’s huge industrial sector for the first time in three years… The re-appearance of deflation in China in July after being dormant since 2016 is a new worry.”

The NBS said the industries which saw the steepest factory price declines included oil and gas extraction, and paper and paper product manufacturing, with falls of 8.3% and 7.1% from a year earlier, respectively. Energy processing firms such as oil refiners and chemical producers also saw big price declines.

It was a different story with consumer price inflation which hit a 17-month high in July, mainly driven by the continuing rise in prices of pork and other proteins due to a prolonged outbreak of African swine fever, and dry weather in fruit-growing regions.

This sounds like a recipe for disaster. Individual citizens are experiencing a rise in the cost of living, because of rising food prices. I am sure that this is not helping their interest in buying goods such as vehicles. At the same time the factories and other producers are having to cut their margins, so that they can sell at least some product, so that they can afford to keep hiring their staff.

This kind of thing doesn’t help Hong Kong’s travel industry. Imagine trying to find rooms for all of those people who can’t get out. Also, all of the cancellations of those who thought that they were flying in. All of the cancelled meetings and vacation plans. People making future plans will keep this kind of disruption in mind.

We, the wifey and I, travelled a lot this past year. I’m reaching a point of being sick of it. So much planning, then luggage, rental cars, paperwork to keep track of, itineraries, trying to find good food along the way, taxis and the drivers of them that take the long way, the people with colds you get exposed to, hard hotel beds, loud noises early in the morning that wake you up. If I never travel again that will be fine with me.

I very seldom travel further than to the nearest town 20km away. I can’t remember the last time I slept in a bed other than in my own home but it was probably about ten years ago, and I haven’t travelled abroad for 25 years.

These days I live my travel life vicariously, sharing the experiences, thrills and frustrations of braver, more adventurous souls such as your good self, or watching a video of Hercule Poirot voyaging up the Nile or riding the Orient Express. I’m looking forward to seeing and reading about Greta sailing the Atlantic soon!

Attention..News Alert!!!
Trump’s Top Energy Regulator Invites Execs to Coal Country
(Bloomberg) — President Donald Trump’s chief energy regulator has invited a group of environmentalists, energy executives and other industry leaders to the heart of Coal Country for a summit on “the future of American energy
Held in partnership with the University of Kentucky, the location was chosen because “it’s a pivotal time in the Bluegrass state and a historic moment as we continue to experience changes in our generation mix,” according to the invitation seen by Bloomberg
Chatterjee’s office confirmed details of the invitation, saying in a statement that “the Chairman liked the idea of getting outside of the ‘DC bubble’ to provide a different landscape and format for these important conversations.” Confirmed guests include Tyson Slocum, energy director for advocacy group Public Citizen; Abby Hopper, chief executive of the Solar Energy Industries Association; and Joe Blount, chief executive of Colonial Pipeline, according to a statement

“Over the last year, we have taken proactive steps to address the challenging oil and natural gas price environment, including stabilizing our production profile, improving our capital efficiency and reducing our overall cost structure,” Sanchez said. “Undergoing a financial restructuring through a voluntary process represents the next phase for Sanchez Energy, as we work with our creditors on a plan to right-size our balance sheet, further invest in our assets and generate long-term value for our stakeholders.”

Energy prices in general, combined with efficiency gains, need to keep falling as a % of GDP, to keep the rest of the economy expanding. For all practical purposes, this means that oil prices cannot rise. Perhaps they can stay sort of level. This acts as a brake on getting out as much oil as people would like.

I think that oil production just goes lower and lower, quite possibly faster than what depletion rates would suggest. The following is my thinking:

Lower prices means less oil extraction. The governments of oil exporting nations get overthrown. In the US, oil exporters keep defaulting on their loans. Perhaps a few oil producers can continue operating, but not very many. The number will keep declining.

As more and more people default on their loan, financial institutions are put in ever-worse position. Many will fail. Unless governments figure out a way to bail them out, they are likely to stop making loans. Oil prices will fall ever-farther, because of declining demand.

I am not sure if anyone (other than a few peak oilers) will care about depletion rates. Quite a bit of oil will be left in the ground, because things as simple as infill drilling become non-economic, or because necessary supply chains are broken. For example, a broken pump cannot be fixed.

In fact, central governments of oil importers (possibly including the US) may fail as well, hastening the decline.

“Long as there is enough oil to take us into the time when other sources take over, things might work out.” Oh and what source might that be? Drum roll. Comedian tells same old joke. cymbal crash, No one laughs.

The oil that is still in the ground. There is a couple of decades of proven oil left at current consumption. That might be enough to make the transition. Or it might not be in which case drag out your worst predictions.

“Proven” reserves are an illusion, like a lot of other things. They depend on globalization to continue, so that we can obtain replacement parts for oil pumps and do infill drilling. Proven reserves depend on our maintaining roads and schools, as well.

If oil prices keep falling, government of oil exporting countries will be overthrown by their unhappy citizens. They will not be able to get adequate revenue. A recent figure I saw said that Saudi Arabia needs $85 per barrel oil, to (sort of) balance its budget. I expect that it really needs more than that.

The issue we need to be concerned about is the possibility of overshoot and collapse. “Peak oilers” came up with a new “Peak oil” concept, but as far as I can see, it is simply the same problem that has been around for ages. Economies grow (often for 200 to 300 years) and then collapse. Resources per capita fall too low. Systems that have been put in place, like globalization, cannot be maintained. We know that when ancient Bablyon collapsed, its problem was low prices for all types of goods. Revelation 18:11-13

I think we started the downhill economic slide when China cut off recycling of quite a bit of plastics and other materials, January 1, 2018. Before this, ship owners could earn 2-way revenue by filling shipping containers with goods on the way to the US or Europe, and filling the same container with recycling on the way back. Cutting off recycling services deprived ship owners of the needed return revenue, when China sent goods to the US. One-way shipping costs suddenly rose (assuming they were passed on to clients). Other countries soon followed suit and China has expanded its list of recycling it doesn’t want. This, by itself, has a tendency to lead to peak transportation of goods (and recycling) around the world. I am sure that China lost quite a few jobs by eliminating much of recycling also.

Boy, Glad I’m NOT a small independent family farmer…is there such a thing now a days!?
American farmers are attacking President Donald Trump in the wake of a new hit from China, which comes as part of the lingering trade war between the countries.

Trump’s “strategy of constant escalation and antagonism” has worsened the situation, Roger Johnson, the president of the National Farmers Union, the nation’s second-largest general farmers group, told Bloomberg. Family farmers and ranchers “can’t withstand this kind of pressure much longer,” he added.

I’m not well versed in the food markets. Can someone explain to me how China refusing to buy USA produced food negatively effects US farmers ability to sell? Presumably food products are global commodities, and if China buys from different suppliers, the previous recipients of those products would have to turn to USA producers for their food? For example, if China buys corn from Brazil instead of the USA, wouldn’t that create a shortfall for Brazil’s previous customers and drive them to then purchase corn from the USA?

I am guessing that what will happen is that, because of the death of all of the pigs in China, the world as a whole will eat less meat in the next year or so. China will be most affected, with the high price of pork in China. China doesn’t want the Chinese people importing a lot of cheaper meat from the US and elsewhere (thereby hurting the incomes of Chinese farmers), and an import ban on US agricultural is a way of keeping spending more within China.

Eating meat is an inefficient way of getting calories. People can live perfectly well with a lot less meat in their diets than they are currently eating. If people eat less meat, there will be much less grain needed to feed animals, particularly the pigs in China. People will probably eat more grains and soybeans, but not nearly as much as the animals would need to eat to create the meat that people like to eat.

So the world as a whole will be buying less grain and soybeans in the next year. China is trying to push the expected reduction in demand in the direction of the US.

That is just a guess, however. China may really be trying to import a lot of meat from elsewhere.

“American farmers planted a lot more corn than expected this year. But at the same time, they also left way more acres unplanted than analysts predicted. Wait, what? If you’re confused, join the rest of the crop market. The U.S. Department of Agriculture put out two reports Monday that seem to be muddying the waters even more after record spring rainfall in the U.S. created widespread uncertainty over crop plantings.”

2017 China imported 19.5 billion dollars worth of US AG
2018 down to 9.1 billion
2019 Not sure how much
2020 ZERO

The trouble is our political system is now working against us. The R’s have rule with the prez & Senate, but no R politician is willing to go up against Trump because he has the alt right base solidly in his hand. The Dem congress can’t do anything. Trump listens to NO ONE except himself, so US farmers will be IGNORED. They may get subsidies, but even if the trade war ends, China may have set up new agreements with other countries for the AG they need and then what happens to those farmers if the subsidies stop?

Also, if farmers do not sell their produce/grains they have to store it. There’s only so much room for them to do that, so at some point they will either sell it to a different country or it will have to be destroyed somehow, by burning or in landfill.

You two are trying to blame swine on the complete elimination of China importing US agricultural products? I guess what DaVinci said is true, “Some people see, some see when they are shown and other do not see.” You two do not see or at least you see what you want to see.

News flash: There’s a trade war between Trump and China. They are going tit for tat. China is purposely eliminating importing US Ag products because farmers are a segment of the US population that voted for Trump. Follow the crumb trail…

Historical background: We’ve always been at war with Eastasia. Speaking in civilizational terms, there was never much amiability between between China and the West. On occasion, there has been mutual profitability underpinning cooperation, but mostly it’s been a history of conflict and competition entwined around mutual suspicion, distrust and disgust, with each side trying not to loose face, and worst of all, to kowtow to the other side.

Chome Mags, I’m no good at being noble, but it doesn’t take much to see that the problems of American soybean farmers don’t amount to a hill of beans in this crazy world.

“The Argentinian peso and government bonds sold off steeply Monday after the country’s center-right President Mauricio Macri performed poorly in primary elections…

“Argentina’s peso shed nearly 25% of its value to around 59 per U.S. dollar shortly after the open of trade. The peso had been at 45.25 at its previous close. According to traders cited by Reuters, the peso then hit a record 65 per dollar to mark a 30.3% loss.”

“Brazil likely fell into recession in the second quarter according to a key gauge of economic activity that comes as policy makers grapple with high unemployment and weak investments as well as a global slowdown.”

That’s exactly not their first doom cycle at least since WWII..
I recall early mid 2000s lot of Argentinians with family connections (returning to Europe).
They usually had to liquidate their assets before they moved and were visibly shaken by being knocked few notches down on their newly reached wealth – social status on arrival..

Another bug alert…glad I moved away from Massachusetts….when I lived there Lyme disease was the big news story. Now a new one has surfaced…a little bitty mosquito!
The first case of the potentially deadly Eastern Equine Encephalitis (EEE) virus has been confirmed in a Massachusetts man, the state’s department of public health announced over the weekend.
The man, who was not identified, is over 60 years old and lives in southern Plymouth County, according to a Saturday announcement from the Massachusetts Department of Public Health.
Additionally, 15 communities in southeastern Massachusetts are at high risk for the EEE virus, while another 18 are at moderate risk.
EEE, according to the Centers for Disease Control and Prevention (CDC), is a rare disease that’s spread by infected mosquitoes. EEEV “is one of a group of mosquito-transmitted viruses that can cause inflammation of the brain (encephalitis),” the federal health agency says.
EEE is more common in Atlantic and Gulf Coast states, though the CDC said some cases have been reported in the Great Lakes area. It’s rare; only 5 to 10 cases are reported each year in the U.S.
Symptoms of EEE typically appear four to 10 days after a person is bitten by an infected mosquito. Severe cases of the virus “begin with the sudden onset of headache, high fever, chills and vomiting,” per the CDC, which noted, “the illness may then progress into disorientation, seizures and coma.”
One-third of those infected with EEEV die, while survivors typically have “mild to severe brain damage.”
There’s no specific treatment for the infection, either.
Gail, you are correct, without spraying poisons and other measures capable by BAU we are toast

When I was in the jungles of Ecuador years ago, I asked our guides why they didn’t use mosquito repellent, Larium, or treat their clothes with permethrin. He replied : “There really aren’t that many mosquitos here. Only when you live in the areas where they have stripped down the forest to grow pineapples or other crops are the mosquitos a problem,”presumably due to the disruption of the ecosystem.
Of course with increasing population density combined with interconnectivity via air and roads, the more chance there is for spread of disease, and more chance for mutation. It’s a numbers game. Some of the diseases may mutate to less virulent forms, but usually the key is improved transmissibility, but when you get enough numbers, then it is like hitting all three numbers on the doomsday slot machine:
1) greater transmissibility. 2.) increased latent period making quarantine more difficult or ineffective and 3.) lethality – but preferably not too lethal as you don’t want to kill the host off before he has had a chance to spread the disease.
The ability of people to develop immunity or to develop an effective vaccine is often a “ catch up” game, or in the case of flu vaccines a role of the dice whether you have predicted the probable strain for this year’s season.

Gail, there is a better way. When my father worked for the Ministry of Health in Nigeria, we kept the mosquitos in check by attacking their larvae. Spray palm oil on stagnant water, and it forms a thin film that breaks their adhesion to the water surface, and they drown.

Palm oil is renewable, biodegradable, and pretty harmless to other living things. And since it works using a physical principle (surface tension) the bugs cannot evolve immunity to it.

For almost every natural problem there is a natural solution. One that is usually not used because it is not obscenely profitable.

“Hundreds of pro-democracy protesters have staged a new rally at Hong Kong’s airport, a day after a massive demonstration triggered a shutdown at the busy international travel hub.

“Only a handful of protesters stayed through the night, and flights resumed at the airport early in the morning. But by Tuesday afternoon, several hundred demonstrators had returned, responding to a call for a new rally.

“The unprecedented cancellation of all flights on Monday followed the fourth consecutive day of protests at the airport and amid increasingly threatening statements from Beijing. A Chinese official said “terrorism” was emerging in the city, while in Hong Kong authorities demonstrated water cannon for use in crowd control…

“On Tuesday the territory’s leader Carrie Lam warned that violence will push Hong Kong “down a path of no return”.”

“Hong Kong could be the black swan that no one saw as the tripwire for the global economy that could then rock stock markets. I know there’ll be smart Alec critics who one day will ask why ‘experts’ like me didn’t see this coming but Hong Kong and the likelihood of their citizens trying to bully China wasn’t on my list of logical issues that could kill financial markets’ confidence.”